Hep C Drug Setting Sales Records As Critics Question Pricing

The cost of Gilead’s hepatitis C drug Sovaldi is so high — $1,000 a pill — that a congressional investigation has been launched to determine why some state Medicaid programs and
private insurers are beginning to restrict its use.

But it is so effective — cure rates are claimed to be around 90% for the potentially deadly disease — without the onerous
side effects of previous regimens that the company announced quarterly sales yesterday that “puts it on track
to become one of the world’s best-selling medicines,” Andrew Pollock reports in the New York Times.

Sales for Sovaldi were $3.5
billion for the quarter ending June 30, up from $2.3 billion for January to March. But critics charge that the regimen of a daily pill for 12 weeks adds up to $84,000 alone, not counting the cost of
other drugs taken as part of the treatment protocol.

“You multiply that price by three million people and you can torpedo the whole health insurance system,” said John Rother,
president of the National Coalition on Health Care. “He said that the second-quarter sales showed that Gilead could afford to lower the price,” writes Pollock.

“This is the
greatest pharmaceutical launch in history,” RBC Capital Markets analyst Michael Yee tells the San Francisco Chronicle’s Stephanie M. Lee. “It's doing sales
in the first year what some drugs like Lipitor would do after 10 years. It's amazing.”

“For decades,” writes Jonathan D. Rockoff in the Wall Street Journal, the “liver disease that would
slowly kill the infected person didn't even have a name, let alone an effective medicine.”

Hepatitis is a contagious
disease that “that ranges in severity from a mild illness lasting a few weeks to a serious, lifelong illness that attacks the liver,” and may result in “cirrhosis (scarring of
the liver) or liver cancer, according to the Centers for Disease Control.

The CDC estimates that 3.2 million persons in the U.S. have
chronic Hepatitis C virus infection but most are unaware of it “because they don’t look or feel sick.”

The most effective alternative regimen for Hepatitis C to date involves daily injections of interferon and ribavirin over a longer
course of treatment with “nearly universal” side effects, according to a Dept. of Veteran Affairs
advisory, including fatigue, rashes, flulike symptoms and depression. Cure rates are in the 40% to 45% range.

“Since approval more than 70,000 patients in United States and 10,000
patients in the EU have been treated with Sovaldi-containing regimens,” Gilead chairman and CEO John Martin said in prepared remarks on an earnings conference call transcribed
by Seeking Alpha. “Sovaldi offers higher cure rates with shortened treatment duration at a cost that is comparable to that of alternative treatment options and for many patients who have failed
treatment with older regimens Sovaldi provides a new possibility for a cure.”

The investigation by the Senate Finance Committee, announced earlier this year and launched this month, includes a request to Gilead by chairman
Ron Wyden, D-Ore., and senior member Chuck Grassley, R-Iowa, for “a better understanding of how your company arrived at the price for this drug.”

“The original developer of
Sovaldi — Pharmasset, Inc. — which Gilead acquired in 2012 for $11.2 billion, expected to profitably sell the drug in the United States for $36,000, according to Securities and Exchange
Commission (SEC) documents,” according to a news release posted on Grassley’s website.

Gilead, which has promised to cooperate with the
investigation, “has proposed a system of worldwide tiered pricing based on a country's per capita gross national income, Reuter’s Bill Berkrot and Deena Beasley reported in March.

“Sovaldi's U.K. price is about $57,000, while the price in Germany is around
$66,000, Gilead has said,” they wrote. And in Egypt, “which has the world's highest prevalence of the virus due to use of contaminated needles in the 1970s,” it costs about $900 for
the 12 weeks.

In an editorial on July 20, USA Todaypointed out that doctors have begun to fight back against high
drug prices “in some cases,” as we reported in April 2013.

“Public
protest can work occasionally. It should not be necessary when lives are at stake. Gilead, which had $2.3 billion in sales for Sovaldi in its first full quarter alone, and the rest of the industry can
well afford to show a little restraint,” the editors concluded.

“If they don't, they should expect more clamor for restraint to be imposed upon them.”